Best Buy Co., Inc. (BBY) & Electronics Retailers Struggling in an Online World

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But, Amazon’s increasing focus on digital content seems to be making a difference. Through Amazon Instant Video, the company offers TV shows and movies, and through its own production studio, Amazon is creating original content to compete with Netflix and Hulu. The hard work is paying off. In its most recent quarter, the company saw a 22% increase in revenue, with a 26.6% gross profit margin. That was the highest gross profit margin for the company in more than a decade.

The outlook for Amazon might be promising, with the company reporting June same-store sales that were more than 30% higher than last year. However, net income continues to be a problem for the online giant, decreasing 37% in its most recent quarter. To provide a more big-picture look, consider that since 2010, revenue has increased 80%, but operating costs have increased by that same amount.

Final thought

For Amazon, continuing to undercut brick-and-mortar locations could spell trouble over the long haul. But, the company has kick-started Best Buy Co., Inc. (NYSE:BBY) and RadioShack Corporation (NYSE:RSH), causing them both to rethink the electronics retail model to benefit consumers and investors alike. Overall, while Best Buy is showing considerable progress, customers are increasingly searching for convenience. If local stores want to continue to compete with Amazon, they’ll have to rethink their business models. Long-term, Amazon seems to be the surest bet, unless Best Buy Co., Inc. (NYSE:BBY) and RadioShack Corporation (NYSE:RSH) can provide online shopping while still keeping delivery rates low enough to undercut Amazon’s always-competitive prices. Amazon, on the other hand, will have to find a way to strike a balance between competing with local stores and sacrificing its own profitability.

Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and RadioShack Corporation (NYSE:RSH).

The article Electronics Retailers Struggling in an Online World originally appeared on Fool.com.

Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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